No bells, no whistles. No too-clever-by-half tax credits or subsidies. Just a straightforward suspension of some or all of the roughly $625 billion the government collects in payroll taxes. A 50 percent cut in the payroll tax, economist Lawrence B. Lindsey estimated during the stimulus debate, would have put $1,500 in the pocket of the typical worker making $50,000 a year. And it would have made hiring or keeping workers less expensive for employers.
After all, if you want more of something, tax it less. If you want less of something, tax it more.
Such a stimulus would have been very progressive because payroll taxes are decidedly regressive, hitting the working and middle class harder than they hit the wealthy. According to American Enterprise Institute economist John Makin, payroll taxes amount to the primary taxes paid by the 60 percent of Americans who shell out comparatively little or nothing in federal income tax.
Ironically, this is exactly the argument the White House is making these days. As Clinton said Friday, "Every single unbiased economic study says the best thing you can do if you're going to take a tax-cut path to grow the economy is to give payroll tax relief."
Lord knows how much money -- and time -- was wasted on the original Obama stimulus. Shortly before the 2010 election, Obama himself admitted that he learned the hard way that there's "no such thing" as a "shovel-ready job." That's an awfully expensive lesson.
I think the initial appeal of the stimulus for many liberals, Obama included, is that it dovetailed with progressive hubris and Democratic resentment, the two defining characteristics of Obama's base. The experts, with Obama as first among equals, insisted that all of the answers were obvious for the smart set.
Meanwhile, the partisans insisted they deserved unfettered rule after enduring the Bush captivity. Obama was elected by exploiting and exemplifying both sentiments. In his arrogance, he even disparaged the Clinton presidency as too mincing and modest. Then, on Friday, Obama recruited Clinton to help save his more ambitious presidency from ruin.
Bill, like everyone else, recognized Obama's comeuppance. Indeed, you could see it in Bill's smile.
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